Buying my Grandma's house- how do I do this?

My mother is disabled and lives in a home that was purchased by my grandmother. Now, my mom is looking to move in with my grandma, and my grandma is interested in selling me the house. Other homes in the neighborhood sell for 300-400K. However, this home has has little to no maintenance, the yard is a mess, all flooring needs replacing, windows need replacing, and the kitchen needs a major remodel. As an interior designer, I know that at least $80K of work needs to go into this home. The last time it was appraised was about 5 years ago for $250K and the market is down.

Grandma wants me to research the cost of the home, ammortization loan payments, etc. Any advice?

I guess I should add details here- the response "never buy a home for it's memories" I find to be odd. I would buy it because it's a good deal, I would otherwise not be able to afford a home like this for several years. The market is low, so it's a good time to buy.

You probably won't pay attention to this so I don't know why I am bothering to type this.

You better not skip the title insurance- there could have easily been something happened that has clouded the title and will come back to cost you thousands when you sell later on.

Get a professional inspection so that you know what costs are likely to come up when you take the home over.

I think the IRS will not like it if your grandmother sold you the house for a huge and unexplained discount. If she sold it to you for $50,000 less than she could sell it to a stranger I think they might look at that as a taxable gift. So you should also get some good tax advice. You will need to have a written, professional appraisal that will cost you about $300 to $400.

While you are at it you would also want to get advice from a lawyer especially if there are other possible heirs. Sometimes family ends up suing family because they think something was a gift that they should have gotten.

If your grandmother is going to make a loan to you and you want to know how much the amortization would work out to be, then just type amortization into google and you will find a bunch of great web sites.

There is little or no need for a real estate agent to be involved.

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Around her the home inspections cost $300 or more depending on how big the house is, how many bathrooms, how many furnaces etc.

have it appraised again.

never buy a house for its memories

I would have a home inspection along with an appraisal. An inspection will turn up lots of defects and problems that an appraisal won't. You might find that the estimated $80k worth of work turns into $160k (heck, it'll cost $10k just to get new windows put on a smallish house--- it adds up fast!) and then the price isn't a bargain any more. Your grandmother might be willing to take that in account when she sets her price, and she might not, so it's best to know what you're really buying before you actually buy it.

I'm going to assume the house has no mortgage on it. Have an appraisal done and see what price the appraiser states will be the ARV ( After repaired value). Should the value come in where you think it is at 300-400K, go on title to the property, and do a cash out refi to get the 80K you think it will take to bring it up to speed. Your mortgage pro can help with your last few questions, but for example purposes, 80 K for 30 year term, at 6.00% is a Principal & Interest payment of $480.00 per month ( Rounded off )

Get the house appraised and get it in writing. Then give your grandmother the appraisal and let her decide from there how much to sell the house for. Remember, just because she's family doesn't mean you can take advantage of her and haggle her down due to the fact that the house requires a lot of maintenance. If she comes in really high then you can discuss the amount of work that is required and see if she can afford to knock off $80K so you can do the work.

Once agreed then she will have to sell the home to you just as she would someone off the street. You'll have to get a loan for the amount she is selling for, put down a down payment and go thru the closing and sale just like everyone else, which would include closing costs paid by both of you. Yours will be upfront her's will come out of the sale price.

now depending on whether or not she needs the money out of the home she can just deed the property over to you and you can "assume" the mortgage, however, if you default she will be held liable and the bank will come after her even though you are listed on the deed to the property. If she deeds the house and in 5 years you want to sell the home she will have to sign the sale paperwork with you or she'll have to quit claim on the home relinquishing all rights to the property so you can sell, if she passes away and she's still listed as owner you might find yourself in a bit of a legal hassle down the road as you won't have clear title to the property, unless she has specifically stated in a will that you are to become the owner of the property.

find out what your grandmothers wishes are she might want to get her money out of the house to live on, in that case you'll have to go thru a sale.